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The use of Non-Disclosure Agreements

20 November 2018

There has been recent focus on the use of non-disclosure agreements (NDA’s) following the reporting of high-profile cases, e.g. the Presidents Club Dinner and Phillip Green.   
 
Commonly NDA’s are used in settlement agreements between an employer and an employee.  They have a legitimate use, as they assist the parties in a dispute.  The employer is offering a sum of money and the employee accepts this in order to avoid the expense and risk of litigation.  
 
Theresa May has said she will look at the use of NDA’s, raising the possibility that they should not prevent disclosure of allegations of sexual harassment.
 
In my opinion, this is rather a simplistic solution.   
 
The media reporting assumes that employees are being forced to sign NDA’s.  
 
Firstly, a settlement agreement requires employees to take legal advice.   An employee will be made aware of a confidentiality clause.  They can choose to reject any confidential settlement and take the allegations to a tribunal.
 
Settlement agreements are usually driven by both parties, as both will want to resolve matters quietly.
 
Secondly, there are instances of employees making false accusations with the aim of obtaining a financial settlement.   If an employer defends the matter and such accusations found their way into the public domain, the result could be adverse publicity and reputational damage.  Thus, some employers will ‘pay-off’ an employee. To prohibit the use of NDA’s which involve sexual harassment allegations is not going to afford an employer any protection in these circumstances.  
 
It should also be borne in mind, that NDA’s cannot preclude a “whistleblowing disclosure”, which allows an employee to speak out about a matter of public interest.   
 
Certainly, NDA’s should not be used by employers in a manipulative and bullying manner.  If there are bullying and harassment allegations, it should not prevent an employer investigating.
 
The best way to avoid a culture of bullying and harassment in the workplace is to put in place appropriate policies and a reporting policy that is trusted. Many employers will want to foster a safe working environment, as they know it makes business sense to have a happy workplace. 
 
For further information, please contact Tina Maxey Tina.Maxey@ellisonssolicitors.com